Kenway Consulting

Kenway Insights – Citigroup

Kenway Insights - Citigroup

Understanding the very real monetary consequences of not prioritizing adequate data governance and management policies and practices within your enterprise – how to not make the same mistakes that Citigroup made.

Industry: Financial Services

Authors: Byron Leonsins


A string of mergers in the 1990’s turned Citigroup into a financial powerhouse. Many years later, the legacy of those deals and decisions made around system integration (or lack thereof) is at the core of a major issue for the bank. In late 2020, federal banking regulators fined Citigroup Inc. (the nation’s third-largest bank) $400 million following a $900 million errant payment which was caused by a lack of proper risk management and compliance controls. Regulators have ordered them to fix their systems due to “significant ongoing deficiencies” to reduce the likelihood of another error. Adding to the pain for Citi, a court ruled earlier this year that creditors could keep more than $500 million of the accidental payment that Citi errantly sent them in August 2020, directly hitting their bottom line.

Due to the lack of full integration as new businesses were purchased, many of Citigroup’s various businesses run on their own independent systems and have their own method for tracking legal entities and transactions. There are hundreds of systems inside the bank and an entity doing business with multiple business units could have different identification codes in each area. This imperfect view of a legal entity and their activity across the bank makes it hard to link all aspects of a relationship leading to limitations in the company’s ability to manage risk.

The Problem

A lack of proper risk management and controls can have widespread impact on an organization. One example is financial institutions need to verify the identity, sustainability, and risks involved with maintaining a business relationship through the Know Your Customer guidelines. These procedures fit within the broader scope of a bank’s regulatory policies including Anti-Money Laundering (AML) and are employed by companies of all sizes to ensure that their proposed customers, agents, consultants, or distributors are anti-bribery compliant – and are who they claim to be. Capturing the true scope of a legal entity is also key to other regulatory and compliance mandates, such as Single Counterparty Credit Limit.

A lack of an adequate and cohesive view of entities across systems makes it increasingly difficult to measure the full scope of a relationship and verify that those business relationships are compliant. It is evident and necessary for institutions to both prove and ensure their compliance with these regulations in order to avoid federal fines like those imposed on Citigroup Inc. 

Beyond the risk management view, there are also lost revenue opportunities by not having a cohesive view of entities across the bank. A financial institution that is unable to connect the dots between the business owner that has made a commercial loan with the bank and the opportunity that may exist by extending wealth management services to that same business owner is leaving revenue on the table. But, in many banks where customer relationships are managed within customer relationship management (CRM) platforms (e.g., Salesforce) that are siloed by business unit, those connections and opportunities don’t often materialize, or at least not most efficiently.

Who This Affects

These types of issues will affect any bank that:

Prioritized growth via an M&A strategy or was subject to recent acquisitions and is facing similar challenges when linking customer records across systems.

Carries significant legacy systems while on a technology modernization effort and could come across issues integrating customer data from old to new systems.

Is looking to enter the USA/Canada and would need to ensure that their systems are compliant with federal regulation.

Has multiple CRM, accounting, and transactional instances across the organization.

Has implemented a master data management solution to master entity data, but the master identifiers only flow downstream, never making its way back to upstream sources.

The Solution

Federal regulations mandate that an organization should have a complete and accessible view of who their customers are across systems and business units, as well as associated entities. This is not possible without adequate data governance and data management across an organization.

Kenway’s Information Insight capability blends data management, data governance, and business intelligence which are fundamental in ensuring organizations have a 360-degree view of customers and associated entities across their systems. Consolidated, accessible, and complete customer data helps with compliance to federal regulations and has a wide array of benefits for an organization including:

Predicting customer behavior and identifying opportunities for up-selling and cross-selling.

Reducing sales cycles and replenishing opportunity pipelines more quickly.

Analyzing customer trends to identify new markets.

Reducing time-to-time market by further understanding customers’ buying patterns.

Enhancing productivity by reducing the number of manual processes.

Improving the effectiveness of marketing campaigns.

Other Insights From Kenway

How Can We Help?